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Why Relypsa Is Likely A Zero: The Chronic Hyperkalemia Treatment Market Is Small

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  • Hyperkalemia, or high potassium in the blood, is unnecessary to treat unless it's at a severe level.
  • Most medicare and most insurance companies don't cover Veltassa for a reason.
  • Veltassa is inferior to its competitor, ZS-9, because ZS-9 can treat both acute and chronic hyperkalemia patients, while Veltassa can only treat the chronic market.
  • Veltassa's black box label is a big drawback.There are problems with the drug and its trials, as revealed by government-funded researchers.
  • A potential Veltassa black swan event, and Relypsa's CEO, John Orwin's, previous company's deadly drug.

Relypsa (NASDAQ:RLYP) is a single-drug company that sells Veltassa, which treats hyperkalemia, or high potassium in the blood. With RLYP's cash burn, and a chronic hyperkalemia market that is in reality very small, the stock could be a zero. So far, sales have been meager, and if they don't pick up rapidly this year, RLYP will find itself out of cash by the first half of 2017, with no funding options. Due to the limitations of Veltassa and its small market, this appears to be the most likely scenario.

The Chronic Hyperkalemia Treatment Market Is Small

If a patient with chronic kidney disease (CKD) has hyperkalemia that reaches severe levels, it can be life-threatening and must be immediately treated. However, if someone has mild-to-moderate hyperkalemia, the hyperkalemia itself isn't harmful.

From Brenner and Rector's The Kidney:

Hyperkalemia, particularly if severe, is a marker for an increased risk of death. However, there is disagreement regarding whether a modestly elevated serum potassium level directly causes significant problems. One viewpoint is that mild to moderate hyperkalemia is a secondary effect that denotes significant underlying medical problems.

When someone has mild-to-moderate hyperkalemia, there are no symptoms, aside from maybe having less energy. Therefore, it's unlikely that they'll be taking a drug like Veltassa to treat it. Most people are unlikely to treat an affliction that's likely harmless and doesn't have any symptoms. Veltassa's market are elderly, sick individuals who might be taking 10+ different medications. They aren't going to take an additional drug that they don't need, especially since Veltassa causes side effects such as nausea, constipation, and flatulence. The drug doesn't improve their quality of life.

According to Eleanor Lederer, MD, from Medscape, once a person's potassium level is restored to normal, the potassium-lowering therapies can be discontinued. If a patient's hyperkalemia remains at severe

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Analyst’s Disclosure: I am/we are short RLYP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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